India Leaps Over Australia, Japan And Singapore!

CBRE, property consultancy recently released a report titled “Asia Pacific Data Center Trends Q1 2024” on Wednesday. As per the report India has emerged as the data center leader in the Asia Pacific region (excluding China).  It has surpassed countries like Japan, Australia, Singapore, South Korea and Hong Kong in installed capacity. As per the report India has the largest operational data center capacity with 950 MW in January to march quarter.

Key Findings Of The Report-

According to the report, after India, Japan recorded the second-highest Data center (DC) capacity with 892 MW. Australia came at third rank with 773 MW, Singapore at 718 MW, Hong Kong at 613 MW and Korea at 531 MW.  The report highlighted that the data center industry has more than doubled since the start of the pandemic.

Furthermore, the country is likely to maintain its lead with a capacity addition of about 850 MW between 2024 and 2026. The total collective capacity of operational and non-operational data centers, stood at around 1030 MW in 2023. It is expected to increase by 30% annually to reach 1,370 MW in the current calendar year.

The report states that the total DC stock in 2023 stood at 16 mn. sq. ft. in. Moreover, between 2018 to 2023, India received investments worth $40 billion including both domestic and global investors.

Anshuman Magazine, Chairman and CEO – India, South-East Asia, Middle East & Africa, CBRE stated, “India, with its favorable market conditions, is attracting multinational corporations (MNCs) seeking to expand their digital services and relocate from other Asian markets due to supply constraints. Sustained demand is expected from banking, financial services, insurance firms, technology corporates and cloud service providers as they explore alternative solutions such as colocation and hyperscale facilities. Furthermore, engineering and manufacturing firms, along with technology companies, are likely to establish their own DCs specifically dedicated to R&D labs.”

Top States…

The top four states in terms of cumulative investment commitments are Maharashtra, Uttar Pradesh, West Bengal, and Tamil Nadu. Mumbai holds 50% share in the total Data centers stock of the country as of 2023. It has remained the most sought after destination on account of reliable power supply, skilled manpower and broadband connectivity.

Chennai, which holds an 18% market share, is the second most popular market because of its advantageous east coast position, which provides access to East Asia. According to the report, Mumbai and Chennai will account for over 60% of the future supply. While Delhi-NCR, Bengaluru, and Hyderabad together are predicted to account for over 30% of the share.

Emerging markets in Tier 2 cities like Kochi, Jaipur, Ahmedabad, Lucknow, Patna, and Vishakhapatnam are expected to grow. This is taking into consideration their strategic locations, upgraded infrastructure, including better power supplies with fiber and cable connections.

Currently, the total colocation data center capacity stands at 1GW. It is more than double the figure from 18 months ago. The new data center supply is projected to reach up to 250MW annually in the coming next five years. The report expects the following top occupier categories to drive the demand- cloud service providers, BFSI companies, retail, healthcare, entertainment, and telecoms.

The Reasons Behind…

India is drawing investments from large global data center operators, cloud service providers, Hyperscalers, private equity investors and developers. This is due to several government initiatives like “Digital India” flagship program which intends to transform India into a digitally empowered one. It has succeeded in its endeavors to a great extent. Moreover, the government has been brining in schemes and reforms to establish India as a “Global Data Hub.” Various tech related schemes like Data localisation Norms, Personal Data Protection Bill, 2019, e- commerce RBI’s policy are ensuring the storage of critical data within the country. Such policies coupled with Digital India, Start-Up India and BharatNet etc. are causing the data center boom in India.

Lastly, India’s cost advantage, availability of skilled labour force, proximity to customers, low climate risk, submarine cable connectivity, stable government, and strong data protection laws are other contributing factors.